The conclusion makes a good introduction, "For the moment, though, I cannot think of a more popular policy than shooting the bankers and nationalising the banks. It might even win Mr Brown an election. Come to think of it, it could also be the way to get us out of this mess." – Philip Stephens
Shoot the bankers, nationalise the banks
By Philip Stephens, Financial Times, FT.com
For once, Gordon Brown is guilty of understatement. The other day the prime minister remarked on the rising public anger at the behaviour of Britain’s banks. Unbridled rage would have been a more accurate description of the national mood.
On a recent visit to Washington I heard several people say that when the reckoning is finally made some big Wall Street figures are going to end up in jail. My impression is that many on this side of the Atlantic would like to see one or two British bankers join them.
Monday’s announcement by Royal Bank of Scotland that it racked up losses of upwards of £20bn last year could scarcely have offered more eloquent testimony to the hubris that has brought the financial system to its knees. Banker friends (I still have a few) say that RBS was uniquely reckless in its bid for ABN Amro. But unless my memory deceives me, Barclays was almost as eager to stump up countless billions for the now-broken Dutch bank. As for the toxic loans on the banks’ balance sheets, every week throws up another horror story.
There was political calculation, of course, in Mr Brown’s comments. He has had to throw another couple of hundred billion pounds of taxpayers’ money at the banks in the hope of averting an economic slump. Mr Brown needed to protect his flank: bailing out the banks again does not win points in the popularity stakes.
The prime minister’s ire was directed specifically at the banks’ reluctance, even after last autumn’s costly rescue, to own up fully to the extent of their dodgy assets.
That is bad enough. But what most angers those running businesses, and indeed those simply trying to keep their personal finances afloat, is the mix of insouciance and venality that often describes the banks’ response to the crisis. We are told it was an act of God; or it was all the fault of the Americans; or we should blame the regulators…
Now it has gone this far I cannot understand why the government did not take the next logical step of assuming majority stakes in all those institutions now dependent on public money.
It would be a lot simpler. The banking system has already been in effect nationalised and the Treasury controls RBS and holds a large chunk of the newly merged Lloyds Banking Group. Banks, such as Barclays, that remain hostile to any state interference could retain their independence by abjuring public assistance in all its forms….
Full article here.
